AmeriGuard Security Services, Inc. (AGSS) 2024 10-K Review

AmeriGuard Security Services, Inc. (OTC: AGSS) reported a 26% revenue increase in 2024, driven by the full-year inclusion of its October 2023 acquisition, TransportUS, Inc., but struggled with net losses amid high financing costs and integration expenses. Here’s our deep-dive into AGSS’s fiscal 2024 10-K filing, key takeaways, and an outlook.

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Table of Contents

1. Business Overview
2. Acquisition & Corporate Structure
3. Industry Landscape
4. 2024 Financial Highlights

• Revenue Growth
• Cost Structure & Gross Margin
• Operating Expenses
• Net Loss and Other Income

1. Balance Sheet & Liquidity
2. Cash Flow Analysis
3. Risk Factors & Litigation
4. Forward-Looking Strategy
5. Investment Verdict

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1. Business Overview

AmeriGuard Security Services, Inc. ("AGSS" or "the Company") operates two primary subsidiaries:

1. AmeriGuard Security Services, Inc. (AGS) – provides armed and unarmed security guard services to federal, state, local, and commercial clients. Major contracts include the Social Security Administration and Department of Veterans Affairs.
2. TransportUS, Inc. (TUS) – offers non-emergency medical transportation (NEMT) for the Veterans Administration in Southern California. TUS manages a fleet of ambulatory and wheelchair-accessible vehicles.

AGSS’s revenue model is fee-for-service. Guards and transportation services are billed monthly, with high contract renewal rates in government work. As of December 31, 2024, AGSS held six active federal contracts covering five-year terms with annual renewal options, generating roughly 89% of its services revenue.

2. Acquisition & Corporate Structure

• Reverse Merger (2022): AGSS (public shell) merged with AGS (private guard business), making AGS a wholly owned subsidiary of AGSS. Shareholders of AGS received 90 million AGSS shares.
• TransportUS Acquisition (October 2023): AGSS acquired 100% of TUS for 3 million AGSS shares ($3 million valuation). This added $9 million in annual revenues and created $1.8 million in goodwill.

Post-merger, AGSS’s leadership includes CEO Lawrence Garcia (86% ownership), CFO Jason Bovell, and a board featuring former Marine Capt. Douglas Anderson and Gen. Russell Honore.

3. Industry Landscape

Contract Security (US $50 billion market) – Highly fragmented (11,000 firms). The top 40 players dominate, leveraging technology and scale. Guard services below $20 million in revenue face margin pressure from regulation, minimum wages, and benefits costs. AGSS’s $17.5 million AGS segment sits in this middle tier, seeking growth via technology-enabled patrol services and 24/7 dispatch.

Non-Emergency Medical Transportation (NEMT) – $7.6 billion US market (2024), growing at ~8% annually. TUS aims to expand Southern California share and win more government contracts.

Market drivers:

• Labor shortages and rising wage costs call for tech/hybrid security models.
• M&A consolidation by large integrators seeking scale.
• Expansion of NEMT demand via public health and aging populations.

4. 2024 Financial Highlights

Revenue Growth

• Total Revenue: $26.44 million (+26% YoY)
• AGS Security services: $17.5 million
• TUS Transportation: $9.0 million

Cost Structure & Gross Margin

• Cost of Services: $23.44 million (+22% YoY)
• Labor & Related Taxes: $16.70 M
• Employee Benefits: $3.39 M
• Vehicle & Equipment: $2.38 M
• Subcontractor, Training: $0.98 M
• Gross Margin: $2.999 M (11.3% of sales, vs. 8.6% prior year)
• Margin expansion from higher-margin TUS mix

Operating Expenses

• Total OpEx: $6.40 million (↑51%)
• Salaries & Benefits: $1.37 M
• Professional Fees & Legal: $0.99 M (↑$0.53 M)
• Loan Interest: $1.50 M (high-rate merchant debt)
• Depreciation, Marketing, Insurance, etc.

Net Loss and Other Income

• Operating Loss: $(3.40) M
• Other Income: +$1.07 M (gain on subsidiary deferred liability)
• Pre-tax Loss: $(2.33) M vs. pre-tax +$0.10 M
• Net Loss: $(2.336) M vs. net income +$0.104 M

Key Driver of Loss: High interest expense ($1.5 M) from debt and merchant advances used to fund rapid growth and acquisitions.

5. Balance Sheet & Liquidity

• Total Assets: $9.82 M (vs. $7.84 M)
• Operating Lease ROU Assets: $3.26 M (vehicle fleet)
• Goodwill: $1.80 M
• Current Assets: $3.29 M (cash $0.42 M, A/R $2.34 M)
• Total Liabilities: $12.94 M
• Current Liabilities: $7.60 M (accounts payable, payroll, deferred revenue, short-term debt)
• Long-Term Debt: $5.00 M (note payables)
• Shareholders’ Deficit: $(3.12) M

Debt Load: $5.86 M in notes payable plus $3.26 M in lease liabilities. High leverage requires refinancing to lower rates.

6. Cash Flow Analysis

• Ops Cash: $(2.61) M used due to losses, working capital build, subscription++
• Investing: $(0.84) M in fixed assets
• Financing: +$1.71 M (new short-term loans and repayments)
• Year-End Cash: $0.42 M (vs. $2.17 M)

7. Risk Factors & Litigation

• Concentration: 89% of revenue from six federal contracts; renewal not guaranteed.
• Debt Refinancing: Failure to refinance can strain liquidity.
• Legal: Three employment-law suits alleging wage violations; AGSS expects to settle pre-trial.
• Small Reporting Company: Limited track record and independent governance.

8. Forward-Looking Strategy

1. Refinance Debt: March 2025 refinance at lower interest rates to slash finance costs and boost free cash flow.
2. Organic Growth: Win new government and municipal contracts (5–10 proposals pending, $12 M pipeline).
3. M&A: Build scale via bolt-on acquisitions in security and NEMT, leveraging existing overhead and mix.
4. Technology: Expand patrol, dispatch, AI/IoT, robotics to boost margins and differentiate in the $50 billion security market.
5. Expand NEMT Footprint: Grow TUS in additional VA regions and Medicaid/Medicare markets.

9. Investment Verdict

Score: 5.0 / 10

Strengths

• High-visibility governmental contracts with stable renewal potential
• Diversified services (armed guard + NEMT) in growing markets
• Hands-on management with deep industry contacts

Weaknesses

• Net losses driven by high-cost debt; refinancing is mission-critical
• Tight liquidity: $0.42 M cash vs. $7.60 M current liabilities
• Legal exposure: wage-and-hour litigation pending

Outlook AGSS sits at a crossroads: government contracts underpin stable revenue, and TUS brings double-digit growth. Yet high financing costs sink profitability. If management executes a successful debt refinance, tightens operations, and captures new contracts or accretive acquisitions, breakeven and profits are feasible by late 2025. In the absence of refinancing or contract renewals, liquidity risks rise.

Conclusion: A moderate risk/reward profile favors a speculative allocation for risk-tolerant investors. The next 6–12 months will be pivotal: a successful refinance and contract wins could trigger a re-rating.

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Net Loss 2024: $(2.336) million.

Download the Full 10-K

This blog post is for educational purposes only and does not constitute financial advice.